Business and Finance

Malaysia’s 1MDB state fund defaults on $1.75 billion dollar bond

1MDB - 27Apr2016

The 5-day grace period for a USD 1.75 billion bond ended at 12pm on Tuesday, officially placing the 1Malaysia Development Bhd  in default.

The USD 50 million interest payment on the USD1.75 billion bond, issued in 2012, was missed due to conflict between 1MDB and the bond’s guarantor. The default triggered further defaults on its Islamic bonds.

The state fund has responded by saying the effects of the cross-defaults are “manageable.” With Malaysia already a global headline for financial allegations, Tim Condon, head of Asia research in Singapore at ING Groep Nv. told Bloomberg “Investors view it as a complication with corporate governance implications for Malaysia, but not a threat to the sovereign’s balance sheet.”

While the implications of the default are not completely clear, Bloomberg TV Malaysia’s Han Tan analyses the Malaysian market response in the video below:

Also, here are a couple of other interesting stories on the event.

Photo credit: Stuck in Customs via / CC BY-NC-SA

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